Monthly Archives: AUGUST 2017

GST and Demonetisation After Effects

GDP growth hits three-year low of 5.7%

31.08.17 - TEAM PT

The economic growth of India slipped to a three-year low of 5.7 per cent in April-June as disruptions caused by demonetisation spilled over to the third straight quarter amid slowdown in manufacturing activities. According to the government data, the GDP had expanded by 6.1 per cent in the preceding quarter.

The Q1 GDP is estimated at Rs 31.10 lakh crore, as against Rs 29.42 lakh crore in Q1 of 2016-17, showing a growth rate of 5.7 percent, Ministry of Statistics & Programme Implementation said in a release.

GST, the biggest indirect tax reform since Independence led to destocking activities undertaken by the manufacturers ahead of Goods and Services Tax implementation.

Finance Minister Arun Jaitley blamed destocking by manufacturers during pre-GST period for lower GDP growth numbers, saying it was the most predominant reason for decline in growth.

Finance Minister Arun Jaitley while addressing a press conference said, "GDP data throws up challenges for the economy.” He said the government will improve and revive growth figures. Following demonetisation, the economy is reeling under pressure and still seems to be desperately trying to recover from the note ban. The economy clocked a 6.1 per cent growth rate in the January–March period — its lowest pace of growth in the past nine quarters.

The national income data released by the Central Statistics Office (CSO) for the first quarter is lowest during the Narendra Modi-led government's regime, which assumed office in May 2014.

The previous low of 4.6 per cent was recorded in January- March 2014.

Chief Statistician T C A Anant said 74 per cent of manufacturing GVA comes from the private sector whose performance was poor.

Prices have risen on account of growth in input costs and "very large level of inventory de-accumulation that took place in the first quarter this fiscal", he said while explaining the numbers.

Observing that it will be wrong to link the entire decline in economic activities to demonetisation, Anant said GVA was declining from the second quarter of the last fiscal, much before the November 8 decision of the government to junk high-value currency notes.

Uncertainty about new indirect tax rates under GST prompted a host of industries, including carmakers, FMCG companies and garment manufacturers, to clear their stocks.

"We are certainly concerned (about low growth)," Jaitley said.

Asked about whether the government can grow at 7 per cent in 2017-18, Jaitley said, "I am hopeful because (of) the pre- GST destocking, this would really be the bottoming out."

He further said there are challenges ahead as growth in subsequent quarters will have to be higher to achieve the projected growth target.

There is good news for taxpayers as the income tax department has extended the deadline to link PAN with Aadhaar by 4 months to December 31. The department had earlier said that tax returns filed without linking of Aadhaar and PAN would not be taken up for processing unless the two were linked by August 31, 2017.

This is a huge relief to those who had filed their income tax returns (ITR) by the due date of August 5, 2017, but were not able to link their PAN with Aadhaar by August 31, 2017.

The Income Tax department and the Unique Identification Authority of India, two agencies that issue PAN cards and Aadhaar cards, have so far issued over 25 crore PAN cards and more than 115 crore Aadhaar cards respectively.

The revenue department will notify December 31 as the due date for linkage. This comes at a time when the government has granted a similar extension for the furnishing of Aadhaar for availing the benefits of various social welfare schemes.

The relaxation in the linkage deadline comes in the backdrop of the Supreme Court recently ruling overwhelmingly in favour of privacy right. The nine-judge bench of the SC in its order had said right to privacy was part of right to life enshrined in Article 21 of the Indian Constitution, thus making privacy a fundamental right.

The verdict has raised several questions over government's series of mandates regarding the 10-digit, biometric-based Aadhaar card, wherein quoting the document number has been made compulsory for accessing various social welfare schemes.

Also, the Supreme Court is hearing petitions challenging the government’s decision on Aadhaar and has posted the matter for next hearing in November.

The government has made linking of Aadhaar with PAN compulsory for filing income tax returns. It has also made quoting the 10-digit unique identification number for availing a slew of services including accessing benefits of social welfare schemes, among them Direct Benefit Transfer is most popular among the consumers. DBT deposits subsidy money directly into consumers' savings bank accounts, thus narrowing the room for pilferage.

FLOODS IN MUMBAI during last three days (and devastating unprecedented floods due to Hurricane Harvey in Texas and Louisiana in the US at about the same time)

Floods in Barmer Sirohi and other parts of Rajasthan and Gujarat.

And of course floods in Bihar UP, Assam and West Bengal.

Millions of people affected, hundreds dead, thousands ill and with lives torn apart having lost loved ones and pets and being financially ruined by losing their homes, businesses, crops, cattle and belongings.

Millions of rupees worth of public assets, roads, railroads, buildings , electric installations, hospitals , airports, dams, bridges and reservoirs that took years of effort to build, laid to ruin in a matter of minutes and hours.

We are devastated by such floods and engrossed in managing the destruction they bring in their wake and providing relief and rehabilitation as well we should be. But before we are done with this task, there's another flood.

We forget that these floods are forewarnings of even greater catastrophes that await us, including earthquakes in flood zones, rising sea levels that could drown some of the biggest cities of the world (including Mumbai, Kolkata and Chennai) and whole countries, including our neighbours Bangladesh and Maldives by 2050, maybe even earlier.

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These scenes of hurricanes and tsunamis alternating with droughts should be ringing alarm bells in the minds of all thinking people.

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Mad urbanization, misconceived concepts of water management and wrong concepts of development are the biggest causes of the floods.

We ignore the forces of nature at our peril. Once we allow crazy urbanisation at our current frenetic rate we will be crying in vain that we should not build houses and roads on the pathways of rivers or their tributaries or on flood plains or on waterways, on areas occupied earlier by ponds, wetlands, lakes, mangroves and so on, we should not pollute our water bodies or over-exploit them, we should not over-exploit groundwater especially millennia old aquifers.

Go to the root causes

Don't starve those who live and work in rural areas and on farms.

Don't build embankments that try to save towns and cities at the cost of the countryside and the less vocal rural populations.

Don't encroach or build on water-bodies and waterways.

Don't build roads or railway lines in the natural path of rivers and other waterways without providing for causeways, high bridges or other means of free flow of water even though the flow is only seasonal.

Don't over-exploit your hydel/hydroelectric power potential.

Stop building mammoth dams or talking about idiotic schemes like river linking that go totally against the scheme of nature.

And don't forget - once the permanent snows and glaciers melt, you'll be facing drought. You may not have water left even to drink.

In fact we see the phenomenon happening already when we had to pump up groundwater in the rice planting and transplantation season for lack of rain and then found our seedlings dying due to excess water in floods

We find Vidarbha region of Maharashtra parched with trains having to ferry drinking water and farmers committing suicide due to continual failure of crops and death of cattle on account of drought and Mumbai City the capital of Maharashtra drowning in unprecedented downpours of unseasonal rain during Ganesh Puja.

The City of Chennai, capital of Tamil Nadu, went underwater for days an year back and yet farmers of Tamil Nadu have been fighting for every drop of Cauvery River waters with the equally water- starved farmers of Karnataka, and pathetically protesting in Delhi with begging bowls in hand and skulls of family members who have committed suicide due to scarcity hung around their necks.

These scenes of hurricanes and tsunamis alternating with droughts should be ringing alarm bells in the minds of all thinking people.

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These are ominous signs that foretell the end of human civilization within a very limited span of time, and we seem bent upon bringing this devastation upon ourselves faster and faster by the day.

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So think about recharging large areas with what is excess of water in some areas today. Learn water harvesting and water management techniques. Make Land Water and Natural Resource Management courses compulsory in schools and colleges. Make environmental awareness programs compulsory on all TV channels for at least half an hour on Primetime everyday.

Boycott corporates who do not strictly follow principles of environmental protection. Lobby and pressurise your MPs and MLAs to bring, enact and help implement environmental protection legislation strictly.

Reject all concepts, models data and statistics of Development which exploit the environment rather than renewing it.

Adapt to Nature

Don't dare to try to twist Nature and it's primal forces for your petty greed. You treat Nature rough, Nature will treat you rougher. In fact, it will destroy you. You can't play with forces of Nature.

Wake up to the perils of global warming and climate change.

When the deserts of Rajasthan and Gujarat begin to sink in floods, when cloudbursts throw out as much water in a place in one day as it usually doesn't get in a whole year, when mountains shatter and floods overwhelm mountainous areas like Kedarnath, it's time to sit up and take notice.

And do something about it

We are already too late to avoid many of the catastrophes detailed above. Let us begin in right earnest to minimise or avoid the rest if we can and to refrain from aggravating what we can no longer avoid.

These are ominous signs that foretell the end of human civilization within a very limited span of time, and we seem bent upon bringing this devastation upon ourselves faster and faster by the day.

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Fast food chain McDonald's India today said that it has terminated the franchise agreement for 169 fast-food outlets in North and East India run by Connaught Plaza Restaurant Ltd or CPRL.

McDonald's India had a 50:50 joint venture with CPRL, a company led by Vikram Bakshi. CPRL was the master franchisee for McDonald's India in North and East India. The decision comes weeks after 43 outlets run by CPRL in the national capital were shut due to non-renewal of eating house licenses by local authorities.

The development could not only wipe out the burger and fries chain, at least temporarily across half the country, but also puts a question mark on thousands of jobs of employees and contracts of suppliers running into crores.

CPRL will not be allowed use of any intellectual properties of McDonald’s at the 169 outlets across North and East India within 15 days of the termination notice, a statement issued by McDonald’s said. The operational licenses of all stores was with CPRL. In its statement, McDonald’s said it would find a new licensee partner for its outlets in the two regions.

McDonald's outlets will remain open in south and west India, where it uses a different franchise operator. McDonald’s said it is working on terms to mitigate impact on affected parties including employees, suppliers and landlords.

"We have been compelled to take this step because CPRL has materially breached the terms of the respective franchise agreements relating to the affected restaurants," the company said in a statement.

The fast food restaurant market in India is worth some $1.5 billion and growing at around 15 percent a year, according to Delhi-based consulting firm Technopak.

With a population of 1.25 billion, more and more of whom have the money to eat out, India is an attractive market for foreign fast-food firms.

But foreign operators must have a local partner to operate and the process can be highly bureaucratic, with restaurants needing an average of 50 licences to operate.

Company chief Vikram Bakshi told the news agency PTI that CPRL was considering what legal recourse was available.

"This is a completely contemptuous, malafide and yet another oppressive act indulged in by the McDonald's," Bakshi was quoted as saying.

The equal joint venture between Bakshi and McDonald's India found itself in tatters when CPRL managing director Bakshi was ousted from his post in 2013, with McDonald’s citing alleged financial irregularities. Soon after, Bakshi moved Company Law Board (CLB) against the move, and McDonald’s moved the London Court of International Arbitration in response. Bakshi was reinstated as MD of CPRL last month by the National Company Law Tribunal (NCLT).

The Reserve Bank of India (RBI) will now issue new bank notes of Rs 50 denomination. The new notes are being made under the Mahatma Gandhi series.

They will also have the motif of 'Hampi with Chariot'.

The new fluorescent notes will bear the signature of RBI governor Urjit Patel. The announcement was made in a notification released by the RBI.

"The Reserve Bank of India will shortly issue Rs 50 denomination banknotes in the Mahatma Gandhi (New) Series, bearing signature of RBI Governor Urjit R Patel. The new denomination has motif of Hampi with Chariot on the reverse, depicting the country’s cultural heritage. The base colour of the note is Fluorescent Blue,” RBI said in a statement on Friday.

The base colour of the note is fluorescent blue. The note has other designs, geometric patterns aligning with the overall colour scheme, both at the obverse and reverse. Dimension of the banknote will be 66 mm x 135 mm. RBI had said in December last year that it would issue new currency notes of Rs 50 and Rs 20.

All the Rs 50 banknotes issued by RBI in the earlier series will continue to be legal tender.

The backside of the image would bear the Motif of Hampi with Chariot, Swachh Bharat logo with slogan and Year of printing of the note on the left.

In the front, the currency note would show the regular salient features of Mahatma Gandhi portrait and electrotype (50) watermarks, see through register with denominational numeral 50, Windowed demetalised security thread with inscriptions ‘भारत’ and RBI, Ashoka Pillar emblem on the right and Number panel with numerals growing from small to big on the top left side and bottom right side, among other features.

The new notes come nine months after the country grappled with a cash crunch following the shock recall of Rs 500 and Rs 1000 notes in a bid to drain illegal cash from the economy.

This is the third denomination that has been revamped since the government's demonetisation on November 8 last year. Earlier, new notes of Rs 2,000 and Rs 500 notes were introduced.